Taxation of Digital Assets
United States Senate Financial Services Committee Chair Ron Wyden and ranking member Mike Crapo issued an open letter on July 11 to the digital asset community, seeking input on the taxation of crypto sites, coin crypto, etc crypto, and other digital assets. The senators provided background reading from the Joint Committee on Taxation to prepare respondents for the highly complex taxation issues.
The Internal Revenue Code of 1986 does not provide a straightforward classification for digital assets, according to the senators. They asked a large number of questions grouped into nine subject areas, including fair value (mark-to-market) accounting, the trading safe harbor to encourage foreign investment, digital asset loans, wash sales, and constructive sales (which are closely related to short-selling). Additionally, the letter covers income from staking and mining, “nonfunctional currency,” reporting by foreign firms, and valuation and substantiation on an exchange. The questions make frequent reference to specific sections of the tax code.
The Internal Revenue Service (IRS) has primarily focused on countering criminal activities with crypto. Earlier this year, it reported that it had seized a total of $10 billion in crypto through its law enforcement efforts.
The IRS has been displaying a more active stance on taxation recently. In one case, they requested user information of all transactions over $20,000 from crypto exchange Kraken in 2021. The District Court for the Northern District of California ordered Kraken to provide the information by June 30.
The Senate committee has invited responses to their letter until Sept. 8, so people interested in crypto sites, crypto india, coin crypto, current crypto, crypto flash, crypto aggregator, crypto today latest, crypto..com, and other crypto-related topics can make their voice heard.
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